Opinion: Crossing the divide

No, I don't usually follow them either, but the story was pretty much the same as usual: revenue up, profits up, iPod sales up, iTunes sales up, laptop sales up, desktop sales steady, AppleStore direct sales way, way up.

This quarter, Apple passed the 200-AppleStore retail branches mark (there's now 208 of them in the world) and it also opened the 15th AppleStore in the UK – by far the largest number in any country outside the USA. So I felt compelled to tune in to the analysis of these results, just to find out if any commentary would be made about Apple's view on how its retail stores and direct sales are now affecting the future of its indirect channel.

And it all boiled down to one small statistic that wasn't published by Apple in its fiscal report; in fact it was only made public when a financial analyst asked Apple's CFO Peter Oppenheimer a direct question about the sales percentage figures for Apple direct and retail sales versus its indirect, channel sales. After a brief check with the PR team that it was okay to reveal it, he calmly announced that globally, Apple's direct sales accounted for 51 per cent of total revenues, up from 49 per cent in the previous quarter.

Now two per cent may not seem like a major advance, but in real terms this means just one thing: Apple has now changed from being an indirect, channel-centric vendor with a direct sales operation alongside this, to being a direct sales company with a channel sales operation as a secondary activity.

This mix is no doubt different in the UK with Apple's historically strong channel presence here, but with 15 stores now open and more on the way, it's evident that Apple's business in the UK will soon be approaching a similar mix, especially as it doesn't seem prepared or willing to encourage the channel to embrace Mac hardware sales with any enthusiasm.

The signs are all there. In October last year Apple UK spectacularly pulled out of the UK's only major Apple end-user exhibition, Mac Live Expo, less than a month before the show was to be staged and has already announced it will not be taking part at this year's event. The show itself has now been renamed 'Creative Pro Expo', dropping any direct alliance to Apple and the Mac. A visit to the new show's website currently shows an exhibitor list without any committed exhibitors.

And I've also had confirmation that Apple UK will not have any presence or representation at Channel Expo unlike last year, despite three of its channel distribution partners having major presences at the show.

But all is not lost. I recently attended a very interesting presentation at Adobe's offices in central London, to hear all about the dramatic growth in CS3 sales, the integration of Macromedia's products into the new CS line-ups, excellent new end-user and channel sales promotions and how the opportunity is out there for resellers to make significant margins on Adobe licence sales and support.

At this event I spoke to the owner of long-established but non-authorised Apple reseller whose operation is now within ten miles of one of the recently opened Apple retail stores. Although his company is not Apple-accredited or authorised, his team are all certified through Apple's online training facilities.

More importantly, the staff from his company regularly visit this local AppleStore to meet and give cards out to all the staff and managers who work there. Some of the crew from the AppleStore have even been to the reseller.

The result? This reseller currently receives a dozen calls a week, and the resulting revenues, from direct referrals for installation, set-up, support and training work for local end-users and companies who have purchased their hardware from the AppleStore.

So even if corporately Apple appears to be leaving the channel behind, there's evidently some hope on the horizon that Apple's co-operation with indirect dealers at a local level might be a possible future partnership.

Earlier this month, the UK's six biggest ISPs agreed to support the record industry with their fight against copyright theft by issuing letters to people using P2P (peer to peer) sites for downloading. We at ITACS support the record industry in their educational campaign and have linked up with www.ifpi.org.

There are a couple of updates to discuss this month. First of all there?s the Vista downgrade rights issue I talked about last month. I had bought a Lenovo laptop from Ingram Micro identical to one I?d had a couple of weeks earlier.

A couple of weeks ago I bought a laptop with really great specs for the price. If it is possible I will recommend machines with Vista Business and the Downgrade Rights option so that people have the choice to use XP Pro.